CFTC Proposes New Crypto Rules to Prevent Fraud Like FTX
The Commodity Futures Trading Commission (CFTC) has opened a public comment period for proposed crypto trading rules that exchanges may voluntarily adopt. Chairman Michael Selig emphasized the need for these regulations, citing the $8 billion fraud perpetrated by FTX's founders. The CFTC oversees futures and commodity price bets but found that while one FTX unit under its regulation kept customer funds safe, around 130 other FTX-affiliated companies collapsed.
The proposed rules focus on retail crypto trades involving borrowed money or platform financing, which federal law already requires to operate on CFTC-regulated exchanges. The agency now seeks crypto-specific regulations, including the creation of a new exchange category called a “crypto asset market.” Selig stated that the CFTC aims to establish rules that prevent fraud rather than just prosecuting after the fact, referencing the FTX scandal.
Under the proposed rules, exchanges that register with the CFTC could offer retail traders leverage and margin, options not permitted under state money transmitter licenses like those used by FTX. In return, registered exchanges would be required to keep customer funds separate, monitor for manipulation, and limit conflicts of interest. Bitnomial, a crypto-native US exchange, claims to be the first to hold all three necessary CFTC licenses for this business.
Comments on the proposal are due 60 days after its publication in the Federal Register. Before any rule becomes binding, a formal proposal and final vote must follow. Kraken’s parent company, Payward, agreed in April to acquire Bitnomial for up to $550 million, pending approval, and plans to use it to offer services to US clients through Hyperliquid, an offshore platform currently barred to US users.